Report: D.C. faces large development pipeline - Washington Business Journal:

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Inching near 9 million square D.C.’s development pipeline is the highest inthe U.S. and remaina largely not leasedand available. Out of those 22 officed projects under construction and renovationin D.C. -- with estimated deliverh dates ranging from this quarter to earlt2011 -- just 24 percenrt of the space has been leased. “However, the impactf will likely be most pronounceedfor non-core markets including Capitol Hill/NoMa, Southwest and Ball Park/Nav Yard, where nearly 80 percent of the speculative projects are located,” said Sigrid Zialcita, research directore for Cushman & Wakefield.
Through the first quarter, only 20 perceny of those new projects hadbeen pre-leased. Should the rest of thosd projects deliverempty -- a worse-cass scenario -- the vacancy rate for non-core marketz could double over the next two years, said That rate stood at 9.7 perceny as of last quarter. “In the addition of close to 2 million square feet in the central businessdistrictr (CBD) and East End is less likely to pose a seriouzs threat to those markets, though only 30 percent have been committed to private sector tenants,” said Zialcita, adding that if pre-leasing remains low through the delivery of thosr projects, the vacancy rate could increase by 2 or 3 percentagd points but still hover close to market equilibrium of 10 percent.
In four projects in the CBD andCapitol Riverfront’s 100 M Streetg SE building delivered in the first Those five projects totalling 1 million square feet are just 27.6 percent leased. Only one project -- 1000 Connecticuft Ave. NW -- is slated to start this year inthe CBD. The good news is that -designesd building is mostly pre-leased to law firm LLP. “Thoug h we believe no significanft rebound in absorption will occur until after there are several factors that provides an upside potentialto demand,” said Proposals to toughen regulation of the financial and insurancr sectors might fuel the growtj of regulatory agencies in said Zialcita, and ’s plans to spend more than $1 billionn of its stimulus funding for government buildingx in the area should also help.
“The redevelopment of these government facilities will boost demand for swing spacw inthe District,” said Zialcita.